Cryptocurrency is most certainly a mainstream tech these days. Everyone including your grandma has heard of it. That said, it doesn’t mean it’s too late to cash in on the growth of the technology. It may be hard for the average person to mine cryptocurrency today, but there are other ways to profit from the buzz. And no, we don’t mean spending endless hours on faucets. One option is buying a small amount of crypto and then putting it to work for you. How? Storing it in crypto interest account like Blockfi. In this post, we will explore the magical world of cryptocurrency interest accounts. Time to conduct our in-depth Blockfi Review.
What is Blockfi?
Blockfi markets itself as a wealth management tool. It offers cryptocurrency savings accounts in several popular cryptocurrencies including BTC, ETH, LTC and USDC. It promises returns of up to 8.6% annually on those holdings, which is far greater than the interest rates available on the average consumer savings account.
Blockfi also offers crypto-backed loans, allowing users to put up crypto as collateral to access loans in fiat currency. Finally, there’s a crypto trading option for BTC, ETH, LTC, GUSD and USDC.
How Does Blockfi Work?
Blockfi pays interest on crypto deposits. When you deposit crypto into your Blockfi account, they loan that cryptocurrency out and charge interest. They then pay a portion of that interest back to you. Easy right. Blockfi is not the only company that offers this form of decentralized finance. What sets them apart is that in addition to offering savings and loans in the most popular cryptocurrencies, they include stablecoins.
Stablecoins are tethered to the value of fiat currency. Therefore, if you deposit funds in a stablecoin like USDC you’ll have the same value of USDC, plus any interest that was paid when you close your position. The volatility of other cryptocurrencies means users can’t be sure what the final fiat value of their savings will be.
Can You Really Earn Interest With Blockfi?
Blockfi is not a brand new company. It’s been around since 2017 and has so far proven trustworthy. It has some high-profile investors, including Winklevoss Capital, Valar Ventures and Mike Novagratz’s Galaxy. The company has had more than $650 million in deposits and has been paying out to savers.
The amount of interest you can earn depends on your holdings with the company. It currently promises rates of 8.6% on stablecoins, 3.2% to 6% on BTC, 4.5% on ETH, and 5% on LTC. Users can store up to 5 BTC while still receiving 6% interest. Above that amount, the rate drops to 3.2%. There are no limits on other cryptocurrencies.
Compared to the world of fiat savings accountst these interest rates are very competitive. There are some other crypto savings accounts that promise higher rates, but their pedigree is uncertain and there is always the risk that any “hot new company” is gearing up for an exit scam. If you can’t afford to lose your funds, you’d be best off sticking with a known, trusted brand with big-name backers. Now onto the meat of this Blockfi review!
How To Get Started?
The Blockfi website is appealing and polished. The onboarding process is easy, and the website is simple to use. There’s a mobile app to allow savers to manage their accounts, and the use of Gemini as a custodian is reassuring. In terms of usability, it’s hard to find fault with the site. They’ve done everything they can to make it simple and accessible. So far so good, things are stacking up well in this Blockfi review.
Withdrawals are manual and can take a few days. This is the one frustrating part of the process. Blockfi uses manual withdrawals so that it can verify the identity of the person making the withdrawal. This indeed does make sense in some ways. However, it could frustrate those who want access to their funds instantly. Make sure you’re ok with tying funds up for a few days before you deposit them.
Borrowing is also easy, although it’s important to note that you need to stake crypto to be able to borrow fiat. This means it’s great for people who have crypto savings and can’t or don’t want to take out a traditional loan. Blockfi allows would-be borrowers to access a loan without an extensive credit check and helps them avoid selling their crypto holdings. Of course, if they don’t pay back the loan, they will lose the amount they staked.
Is Blockfi Worth Investing In?
Blockfi has a lot going for it. The company has a longstanding reputation and the interest rates that it promises are not implausibly high. Blockfi pays out on a monthly basis. You can access your funds whenever you wish, albeit with a delay. It’s clear that decentralized finance is here to stay, and Blockfi does appear to be one of the more trustworthy brands in the world of crypto-earning interest accounts.
If you’re looking for something to do with your cryptocurrency rather than HODLing it in a wallet, Blockfi makes more sense than spending it in a crypto casino. There are some risks with the system. You are exposed to some counterparty risk whenever you are a lender. If Blockfi fails, your funds may be lost. It’s up to you to decide how likely this scenario is. If you’re risk-averse, keeping your crypto in cold storage in a wallet you control is the best bet, but of course you lose the chance of earning interest. Only you can make that decision.
Final Blockfi Review Considerations
If you’re someone who doesn’t like trading on an exchange, and you are looking for a “set it and forget it” way of making a bit more from your cryptocurrency, we think Blockfi is a great option.
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